DMR-Gold, financial markets cautiously on hold – at least for now

DAILY MARKET REPORT

Gold pressed cautiously higher in Asia overnight then gave up most of those gains at the New York open. Today’s election outcome and tomorrow’s Fed meeting have the U.S. market on hold – at least for now. Stocks, bonds and the dollar are all similarly in a wait and see mode.  We won’t belabor the point.  If anything of interest develops during the course of the day, we will be back with an update.  As it is, gold is even on the day $1232.  Silver is down 3¢ at $14.62

Quote of the Day
“Deflation is a threat posed by a critical breakdown of the financial system. Slow growth and recurrent recessions without systemic financial disturbances, even the big recessions of 1975 and 1982, have not posed such a risk.  The real danger comes from encouraging or inadvertently tolerating rising inflation and its close cousin of extreme speculation and risk taking, in effect standing by while bubbles and excesses threaten financial markets. Ironically, the ‘easy money,’ striving for a ‘little inflation’ as a means of forestalling deflation, could, in the end, be what brings it about.  That is the basic lesson for monetary policy. It demands emphasis on price stability and prudent oversight of the financial system. Both of those requirements inexorably lead to the responsibilities of a central bank.” – Paul Volcker, Keeping At It: The Quest for Sound Money and Good Government (2018)

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: Bloomberg reported early Friday that the president had instructed the cabinet to prepare documents for a new trade agreement with China.  Euphoria.  The stock market shot higher.  A few hours later White House economic advisor, Larry Kudlow, said no such order had been given. Chagrin.  The stock market promptly reversed those gains losing nearly 500 points on the intraday swing.  Sandwiched between the two media stories, the Commerce Department reported U.S. imports setting an all-time record at $266.billion, and that is probably the development of abiding interest to the Trump administration.  China’s exports to the United States rose 4.5% even as tariffs kicked into gear.

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